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Banks sprint to profit goal finish line
A number of leading commercial banks expect to reach their profit targets before year's end, but concerns remain about difficulties in achieving necessary levels of credit growth.
As of August 31, Asia Commercial Bank had posted a profit of VND1.8 trillion (US$92.82 million) after setting aside funds for risk provision. Its oustanding loans were VND79.5 trillion (Just over $4 billion).
The bank's general director, Ly Xuan Hai, said that the bank was likely to achieve 20-per-cent credit growth in the final four months of the year and post a profit for the year of VND3.6 trillion ($184.61 million).
Profits of Sacombank (SCB) reached VND526 billion (nearly $27 million) at the end of last month, against its target for the year of VND700 billion ($35.9 million), while HCM City Development Bank (HDBank)'s net profit of VND201 billion ($10.3 million) as of the end of August was equal to 67 per cent of the bank's plan.
| Interbank rates increase to 13.3%
HA NOI – Interbank lending interest rates during the week of September 3-9 increased to as high as 13.3 per cent per year, according to the latest report of the State Bank of Viet Nam released on Wednesday.
Trading in Vietnamese currency on the interbank market totalled VND147.75 trillion (US$7.6 billion) during the week, while US dollar trades reached $4.16 billion, down slightly from the previous week.
Six-month loans witnessed the strongest surge, up 1.64 percentage points to 13.3 per cent per year. Interest rates on other terms increased by 0.2-0.58 percentage points to a range from 9.09-11.26 per cent per year.
The overnight interest rate was up 0.39 percentage points to 7.16 per cent per year. In contrast, lending rates on US dollar-denominated loans were down across the board. Twelve-month term loans fell the most deeply, to carry an average interest rate of 3.13 to just 1.99-per cent. | An Binh Bank (ABBank) posted profits of early VND500 billion ($25.6 million) in the first eight months of the year, exceeding 90 per cent of its target for the entire year.
But ABBank deputy director Pham Quoc Thanh warned that the current situation was not ideal for credit growth.
National Financial Supervisory Committee vice chairman Le Xuan Nghia also predicted that credit growth may not reach the level banks have expected, with some banks already expressing worries that slow credit growth would have a negative impact on their bottom lines at the end of the year.
"It is rather difficult to give any forecast when the economic recovery is slowing, the European debt crisis is still worrying domestic enterprises, and product markets are not really open," Nghia said.
By the end of August, Vietcombank has posted a profit of VND3 trillion ($153.84 million) after setting up a fund for risk prevention – far short of its target for the year of VND4.5 trillion ($230.76 million).
Vietcombank chairman Nguyen Hoa Binh said, "I believe we can achieve this goal but we don't dare to think of doing more than the target under these circumstances."
Over 20 banks were still struggling to increase charter capital to VND3 trillion ($153.84 million) to meet the requirements in Government Decree No.141/2006/ND-CP.
The pressure of high interest rates on profit margins and pending, stricter regulations on the capital adequacy requirements of bank might also effect bank bottom lines, Binh said.
Thanh was more optimistic, noting, "Capital demand in the fourth quarter often increases more strongly than usual which will help banks expand credit and increase profits."
When Orient Commercial Bank (OCB) had reached just VND250 billion ($12.8 million) of its VND400 billion ($20.5 million) profit target, OCB director Trinh Van Tuan believed the bank could achieve the target soon.
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